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How does industrial policy affect corporate M&A Activities?

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  • Guo, Jingjing
  • Huang, Zhihong
  • Zhou, Baicheng

Abstract

This paper uses the Five-Year Plan (FYP) to conduct a quasi-natural experiment and examines the impact of China's industrial policies on corporate mergers and acquisitions (M&As). The results show that firms supported by industrial policies are likelier to initiate M&As and do so more frequently. Large firms and state-owned enterprises are primarily responsible for these M&As. Additionally, firms that benefit from government subsidies and low-interest loans have greater capacity to initiate M&As. While industrial policy does not significantly influence M&A performance in the short term, it can have a negative effect in the long term. These findings contribute to a nuanced understanding of the government's role in corporate strategy.

Suggested Citation

  • Guo, Jingjing & Huang, Zhihong & Zhou, Baicheng, 2025. "How does industrial policy affect corporate M&A Activities?," Finance Research Letters, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001734
    DOI: 10.1016/j.frl.2025.106909
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